PowerTrade, a crypto exchange focused on derivatives, is rolling out a request-for-quote (RFQ) model for the options market, which it says will cater to institutional investors by mirroring a widely used practice in traditional finance.
The exchange, which is available as a mobile and web-based application, is the latest to launch an RFQ model. Institutional players tend to prefer to trade options as multi-leg RFQs as they allow investors to buy and sell assets in bulk. Generally speaking, an RFQ is when an investor asks brokers or market makers to bid on a trade.
Client A sends an RFQ, which is then visible to all market makers, including any other client who wants to show a quote.
PowerTrade’s options market maker sends a two-way quote (bid/offer) back to client A.
Client A or any other client who is logged into the exchange can trade on the quote, and the trade settles on the platform.
Proponents say that RFQs allow users to gain access to better prices, particularly for medium-...
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